Increase Synergy Value, High-Cost Efficiency and Increase Economies of Scale Free Essay Example, 3500 words

This paper illustrates that international merger and Acquisition strategy is a source of synergy and surplus power that enables a firm to boosts its performance and efficiency. Companies coming together in the mergers and acquisitions have different market shares that would give them a better performance index if they combined efforts. The move also increases cost efficiency for firms that deal with the same product or come from the same industry. The combined effort results in an entity that enjoys immense profit and related financial gains that single rival firms cannot get from the market. Consequently, increased synergy is associated with the topology of market power gain as well as empire-building aimed at reaching a global level. Additionally, the increased synergy value that is in a number of forms including revenues, expenses, and cost of capital ensures that the new legal entity realizes revenues and a lower overall cost of capital. This corresponds to the synergistic the ory, which indicates the ability of two combined companies to be more profitable compared with the two firms individually. AT T acquisition of DirecTV is a move seen to acquire synergy and build an empire. We will write a custom essay sample on Increase Synergy Value, High-Cost Efficiency and Increase Economies of Scale or any topic specifically for you Only $17.96 $11.86/page